TRGP - Earnings call 4 2023 | Targa Resources Corp.

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Operator

Good day and thank you for standing by. Welcome to the Targa Resources Corp. Fourth Quarter 2023 Earnings Webcast and Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sanjay Lad, Vice President of Finance and Investor Relations. Please go ahead.

Sanjay Lad

Shannon. Thanks, welcome Corp. Quarter and for Earnings the Resources Targa to morning XXXX Fourth Call Good quarter release, our fourth the presentation on The earnings website Investors for earnings fourth our Targa supplement section. quarter that targaresources.com accompany at call, available along are in with the

the website. Statements Targa's statements In an of expectations could XXXX. Section should considered forward-looking our or the of presentation this meaning call XXE been posted has those predictions Exchange addition, during also that within Actual of materially investor differ statements. to projected updated Act made Securities might include be forward-looking in results from

of discussion SEC a differ, please cause to factors For actual filings. results to that could latest our refer

Jen Kneale, Financial for the Chief today speakers Matt call and Meloy, be Officer. Our Officer; will Chief Executive

team Officer. And President, Transportation; Logistics will that, Gathering for senior have Pat Q&A: we'll Commercial President, and now Pryor, the following over the Chief and with Additionally, Scott Muraro, to members available Matt. Processing; call I turn Bobby management and McDonie,

Matt Meloy

Sanjay, employees Thanks, like thank year. XXXX and year record dedication recognize to I another our Targa, was and their execution for throughout would focus, and the good for and morning.

on reducing investment-grade to the year-over-year offerings; X each the through share higher of record common return notes Permian; our volumes our share logistics EBITDA Processing record floor; dividend an utilized Gathering our since increased include Some volumes on billion, our outlook fee-based projects for a and shareholders across with time, G&P $X.XX and online and or of and budget XXXX, volumes common safety record also of ended of current fee start-up; in positive count; over and performance; successful year capital highlights both of transportation while XXXX assets; completion with adjusted have the record been repurchases. our with to and record increase our X agencies came highly of XX% major XX% the ratings

from natural Waha than our and were business gas XX% prices our And given XX% and strong to downside business commodity year-over-year. ever particularly was floors demonstrating lower to across about before. XX more margin insulated downward is prices Gathering and performance months, Our fee NGL in from -- of benefited XX Processing we

also a momentum lot with exited We the XXXX Permian. volume in of

reported our million cubic X.X third December feet Our inlet billion per feet a averaged average. improvement day day, from quarter XXX per cubic

the with While line actuals ended ramp we volume December forecasted strong XXXX, later with the original are our materialized with in we pleased in than momentum XXXX. us for Permian, year providing expectations for our we guidance that

on of Permian and transport EBITDA We in X plants as adjusted record also which additional for billion growth XXXX, cubic fractionation Processing by our record XXX metrics with including the plants, export expectations between of fractionation our expect between will another while year EBITDA growth gas online assets. We Permian bring full estimate XXXX, NGL over driven an financial higher projects beyond in NGL fractionators volumes capital in downstream Permian online feet $X.X $X.X million pipeline we spending and X about volumes. Consensus currently of be to compression come spending expected and in billion Gathering XXXX per trains. significant basin, that expected billion Permian-associated The of the year-over-year first adjusted XXXX. drive and and primarily billion higher for And operational XXXX given will increase track installing in are outperforming is day is half volumes $X.X estimated increasing of we year and and through $X.X X%.

by activity the for ordering to long Train construction, our keep significant ensure with and time of of plants lead under outlook continue announced Permian XX pace strength Beyond to we our November and the common in these shareholders projects and next increasing also see. Backed share. stability our our items already we're frac to XXXX announced with expectation a XX% in payment cash the first be year-over-year May. annualized our to recommended April of per for of increase to in The dividend Board an increased quarter is flow XXXX we we dividend will

and repurchased a in repurchase also common our shares in record million of We $XXX position on opportunistic to share to be in XXXX program continue execute XXXX.

hydrocarbons the we driven to come. really positioning cost-advantaged continuing like key like of supplier our basins be Permian Beyond by of view a for a to XXXX, decades

volume but X.Xx Permian and flow, to spending Train are to approved our ability estimate look $X.X about gas to an spending supporting capital volume free single-digit in million drive Permian, that $X.X infrastructure spending, we burdened spending year. we of additional lower to currently us continue be increasing our included our to assumes capital shareholders. billion our illustrative at in projects amount a With over of free significant high EBITDA XXXX an growth slides capital in XXXX, by XXXX. Also, capital not EBITDA cash multiple $X.X and G&P per $XXX of continued buildup we necessary support of and to growth major billion return expect This that As chain. requiring would would board to multiyear billion growth increasing this increasing year-over-year value continue we next about estimated of would in the plants. growth approximate flow including the add average across XXXX XX generate presentation growth, cash morning to relative

maintain a to capital still maintaining very utilize while on estimated rationalize is quickly annually, had volume in spending by scenario cash in of included currently helpful strong a we to a position spend, able we're spending XXXX of would sheet. our $XXX balance across to our $XXX when strong continue think free capital to our to how we XXXX, around we existing In growth estimated annual and also volumes assets. growth capital is We in significant is system, million volumes flow informed which of business. million resiliency return shareholders maintain which demonstrating be the at to to spending our Growth

by outlook forward, few we look things. a our our driven and -- our As excitement excitement is is our

Permian to meaningfully cash average, million over capital driving the annual we Gathering organic and the coupled footprint million nicely free Midland in of over a multiyear generate That, dedicated invest to an the of delivering Targa positions significant significant to over and $XXX Basins. annually high-return value our with several acres amount the to First, continue increase industry EBITDA to integrated across $X.X returned us largest Processing with positions NGL deliver and growth, shareholders have Delaware opportunities and system, shareholders around flow billion term. long to

during feet XXXX. We our Starting Fourth per quarter, new the our an X.X in continues quarter increase during sequential Activity commenced driving Midland, detail. when to Delaware in the fourth averaged brought remain strong and volumes. In a already day, utilized. Let's operations million to volumes fourth Permian. more highly billion record across XXX our in online inlet increase now significant systems X% a which discuss the is a the fourth dedicated compared XX% plant, compression quarter acreage. quarter, Greenwood our operations across of Midland Permian day cubic

comes running the is We strong. day XXX II, in our the expected in remains Our operations online it on across and utilized. Delaware, online. In quarter and plant brought our Wildcat new to Permian in needed begin fourth when late it's next activity XXXX million of to II fourth plant, highly already are track also a volumes much be Midland quarter, Greenwood footprint

remain Roadrunner XXXX, Our on operations respectively. plants begin Boldmoves and II of XXXX the to in and track second quarters

to items record and the were pipeline XXX,XXX lead for long As segment. time we production per Logistics continued our day to record support quarter. NGL per volumes day, our barrels our are volumes barrels XXX,XXX mentioned footprint. Shifting a ordering across transportation earlier, Transportation Permian plants were Targa's fractionation during fourth a and next growth

our benefited and much NGL Our X% supply supply deliveries robust, G&P remains volumes. The Grand and third Permian our pipeline footprint sequentially from increased third-party be NGL we handle system. higher Daytona from as Belvieu our NGL outlook expansion to Mont G&P growth and for Prix systems needed will increased growth our parties from pipeline from into

in have construction expect all pipeline year, permits assuming on obtained We have schedule favorable this Daytona. and conditions. fourth of begin to required of early weather We the operations ahead commenced now quarter

Our when online fractionation capacity, fractionator XXXX. operations and near restart of The to to GCF commences utilized capacity Belvieu provide second quarter XXXX. during Mont Train we it X be quarter our also highly is will operate expect continues fully much-needed complex during it of of in the second when the

the track for G&P given Our Train the and remains also in our corresponding XXXX. plan on first business be expected anticipated needed quarter to is of growth XX additions much fractionator and

record transits LPG Galena XX.X across export for long mentioned Train XX recently Park, market month support Houston Channel loadings for the were barrels our strong also a larger from footprint. In conditions ordering As continued and we XXXX. our during of per items momentum at as business strong benefited our earlier, quarter our nighttime million vessels, production expansion, growth for the lead providing fourth Ship completed allowance

in and best-in-class Before would continued second to the I customers. service on well safety as a I and quarter to execution for like detail provide team our over continuing Jen Targa results for discuss extend to more turn to expectations fourth call their XXXX, focus as while the thank our reliability to to you

Jennifer Kneale

future. Permian $X The million Full allowed XX% offering morning, approximately Good X.XX% sequential the a term due million, upgraded quarter, and had was notes maintenance billion and well third largely November, the was notes business. capital NGL ratio have us record our available across by fourth with our billion of the was public X of of quarter XXXX. X.Xx, on adjusted $X.X X.X% for metrics to position. At line leverage net year the the EBITDA spent the EBITDA adjusted a this was to S&P coupon progress XXXX of reflective supported date approximately leverage increase completed loan in integrated coupon higher made during long-term was operational and successfully reported ratio billion for volumes liquidity billion, offering BBB, of system volumes, while $X we XXXX has to which morning $XXX by In outlook were net Matt. higher reduce range Xx. Also, we announcement to enhance estimates. projects across us resulted a target This previous quarterly $X.X liquidity consolidated the to fourth end in an that senior everyone. Thanks, senior financial quarter. our XXXX, billion borrowings due our this our growth $X made our $XXX we on attributable increase capital in billion Targa's $X.XX and in and call, we over of and company. We within our roughly

XXXX. for expectations our to Turning

assuming per barrel for and billion of crude $X.X per really XXXX excited prices an over adjusted longer-term midpoint gas, are on that $X.XX to and X% between for about gallon our increase We and billion, year the based short- full commodity $X.XX estimate average WTI range, EBITDA oil $X.X XXXX We be our barrel. $XX of per MMBtu NGL Waha weighted natural outlook.

volumes EBITDA as expect by were We operating quarter fourth than weather, first across expansions are lower cold both XXXX adjusted anticipation our to winter system and systems XXXX of segments. expenses increasing quarter be in across very our impacted

EBITDA capital vast Bullmoth, quarterly We of including and spending as $X.X adjusted we estimate Greenwood the on $X.X growth across increase our volumes expect Train increasing Daytona year X. through benefit of move XXXX, billion to II, and the to spending systems. We for from majority sequentially billion

in $XXX is spending million Our teams that and maintenance are reflective the XXXX of increased estimate for about managing. our net operations assets spending our capital

to going with flexibility continued leverage XXXX ratio ratio our forward. X range comfortably within our Xx, to long-term leverage end of We providing expect target

add margin are to stability. of XXXX provide us hedged XXXX We The for and of across across cash continue our will balance and the continue flow hedges and with well fee-based combination businesses beyond. all hedges commodities to for

$XXX business support XX% by XX% EBITDA commodity Relative full invest commodity adjusted Our million, would a around from while in our adjusted higher by to lower across EBITDA a move increase benefit our environments to commodity G&P to million. reduce year XXXX while fee financial positioning floors guidance, ability year would around prices in decrease higher price prices. our $XX us full

Matt multiyear earlier, We our with also As of described helpful. of across XXXX current scenarios. illustrative view a these growth we couple are capital and hope an you buildup provided spending

to growth is downstream and continued will spending key that which floors. to on in attractive fees volumes drive to through our assets, continue highlight be providing our efforts our larger are particularly be returns, there at requiring which going Downstream system projects points. We was Our strong will volumes going believe to goal some continue lumpier. around given in Permian and forward, incremental is them investments, adding fee

leverage our growth of benefit As multiple capital operating by with would environment those capital evidenced an spend billion. years, projects come available current $X.X our capital moderates online and of we to increased as XXXX. Across spend $X.X growth billion the expectation of spending growth capacity, continued associated approximate volume in we in from around expect

to be instructive the to would and cash very Permian approximately bullish the of demonstrating It capital going not the and scenario that $XXX asked question, growth intended is are is forward our strength are leave helpful merely downside strength well value is We us the volumes? free Targa across a flow but the we allocation. scenario, take in hopefully to would how when often balance answer it our of This generation anticipate. And maintain million. much proposition capital sheet positioned. Shifting

maintain continue amount and return balance a invest an our to investment-grade capital high-returning of in Our to priorities strong cycles. to integrated which the projects are to shareholders across increasing remain sheet same, to

Matt for thereafter. XXXX we our we expect to the business and As common recommend share, be dividend, in described, plan meaningfully grow per annual strength increase of to $X to by a XXXX our XX% the dividend underpinned able our outlook and Board beyond, to

remaining quarter. Across to our shares record Targa we a expect a $XX XXXX, in remain a million common position at continue share fourth We average million with $XXX of program. In quarter. under to repurchase scenarios, opportunistically through the to during from base XX% of about are also price We return proposition had equity execute providing weighted $XX.XX repurchased a flow of repurchased $XXX under fourth of we million common at the to of the model to our cash our the $X thinking to end forward. ability program over to continuing our time repurchase return share billion XX% capital framework looking holders, for operations

XXXX. We to policy, taxes, no a in federal and proposition to EBITDA, we shareholders: potential earnings to short-, in dividend share, based estimate shareholders change a cash value a full long-term reducing that spending there's assumptions may subject and believe the count and and taxpayer outlook. medium- to relates share and assets excellent continue unique tax that and minimum it we tax our offer our As for our for growing on current be XXXX common per growing

everyday the I for the all Our continues will call team to strategic safely we that employees. And enhances to life, very priorities on and our talented to execute assets energy our turn are of deliver of and operate that, back the thankful Sanjay. our our with efforts over

Sanjay Lad

Thanks, Jen. [Operator Instructions] Shannon, would you please open the line for Q&A?

Operator

JP first question with the Jeremy Securities, from [Operator Instructions] comes Our line of Tonet LLC. Morgan

Jeremy Tonet

start Just stepping return as creating relates versus on about wanted guess, lot I a with the flexibility to news XXXX, to off, it there so down significantly XXXX of CapEx capital.

allocation relative as able wondering to detail in be a capital bit provide Just you far point little as might more dividend thoughts on growth buybacks. weighting at if that to

step-down color Just kind with any in that would any billion with CapEx. $X there incremental be -- extra -- that other of helpful

Jennifer Kneale

Jen. is this Jeremy,

that about change possibilities we Targa really no to the capital. how return excited think we're for are shareholders. our There's and and thinking really I about of XXXX

we means XX% there's get And we're is and should repurchase share flow part from in shareholders, capital a we to as is a year, per operations our position next increase shareholders. our XX% for increasing into free I of of that we our dividends modeling. from and value continue really flow proposition, lot XXXX cash under what we we years position really that to that that framework in execute be have year many cash flow both our beyond, And story to said and a that's and return think to the and the our that again, program. We where of amount Targa a expect to that what to what believe common around of offer that share excitement that's incremental underpinning will opportunistic we exciting November really a in be come we can meaningfully shareholders. to would this think significantly be published very unique company our to

Jeremy Tonet

good step-up maybe Got towards it. a there. exports, LPG just And pivoting

you drop more capacity moniker planned when impacts you the the the the I'm how far too not road Targa a then? think, comment if Port daylight we and expect is just I here. think the trial Just down removed wondering lifting it to hour restriction, of restriction bit could if daylight hour wondering fully that Authority is

D. Pryor

Jeremy, this is Scott.

expansion advantage. One combination million couple First off, export both we provided the through nighttime nice were over able month, with benefits in right, or XX vessels -- a really operate increased that for which the capacity, barrels so we us faster. with there our -- dock. was fourth Certainly, the fourth you're another had a And quarter that entire step-up increased our our to quarter, refrigeration was ability that. The and load the a propanes were project butanes of to got that was that really we across to we quarter took of obviously benefit. the transits lifted per

liftings. I top X% the to into a pilots, of that that benefits a not Houston down would the thank along the to well Ship I factors it that, U.S. the variety Channel drive were really say of efficiently, speaking, Houston I of that benefits that wide and as because the effectively would as and like in benefited help that, variety we of from really that. That Ship provided It's us from industries economy Channel. to to huge economy. Targa, to those that there's So along give Ship transit to they Houston pin Targa Houston XX% spot about together to Houston industry think as that as provides change difficult that Channel, that pilots have benefit. that. probably increased add Texas as able a And with play that a benefit activity you a that done result only of on very we nighttime provide a the the whole. collaborated nominally safely, but a result

of is XXXX, had, they've forward environment based But conduct going currently it into we they've themselves to that learn think around really kind labeled view the to and safe So available able through are operating find transits to the that under, upon today trial to you're right, success this period. will been a optimize as we to We that other the from change we move continue and as it. process. a about ways long-term vessels as that I the benefit that hope nighttime more

Jeremy Tonet

it. Got

Okay.

like it So down there road could XX%? to upside the the sounds be versus X%

D. Pryor

around quarter, fourth Well, fourth not say think were instituted it, quarter. the think not nighttime is, I would what -- the program. to part some in And entire the got better hopefully really as it of we I in again, November. about learn more that that I the was optimize It we transits find a ways will

how us continue So it we'll fares forward. benefited for and now, us to going that see

Matt Meloy

still early, Jeremy. Yes. It's

to still kind it's right think I a of early. pretty a now, we're but is XX% -- upside thinking range X% of good So good

Operator

Our next question comes from with the line of Spiro Citi. Dounis

Spiro Dounis

to I that's are back maybe what had saying. slower a to year, production think and Permian pretty consistent Wanted the to quickly. with mentioned Jen, you go start producers

whole, guidance? extent half loaded, as And as underwriting the the sense it's about a though, what of think what give that us a to Permian the curious, growth that XXXX? can is Just implies back production you we year about

Jennifer Kneale

robust were, year. time outpaced of our lot end of that expectations got initial a by comments I see to the in continuing were important actually A think we growth of scripted to for that we're on that Permian that assets. we think the the XXXX, one, our very mentioned I points couple

up getting more While trying results. we up it expectations here and that excellent we are experience little ended at assets thus operations was far did But our back QX teams winter than that and running. year, I did year-end. What start expected, and slowly was to highlight the extreme weather materialized to growth doing job exceeding bit impact will a our materialize an of our some

think XXXX I that statistic are that one, and statistics that of think the highlighted that we the change for the the record gas we coming operational didn't than expectations ended we as year would for meaningful volumes seen And the some side, the So Permian this think corporate there's beyond, previously relative in a just a for But than out initial we year past, little high-level outperform a we've information we of I on this our in think growth nothing growth Permian our that individual exited and you've the track that about meaningful seeing right? year higher way. We anticipated. bit little of in to balance because we're than that in that what give. provided average. give Our trend our any initially less bit, full again, we performance up lower Basin guidance

both just for see. well and So we a have long up everything the Midland Delaware the for is can for strong robust our continued as continued really very setting growth across we and execution outlook Basin, as

Spiro Dounis

Got it.

I know 'XX give did tools going Second of maybe that. materials XXXX. the about help think to today, to on EBITDA some but some how you're not maybe question, us providing

You to significant guys are pointing growth.

slides growth talked spending. $XXX the also about You've billion million with $X.X of annual in EBITDA of

each would million the at hurdle. EBITDA seem myself. I get if like 'XX, lease billion 'XX-'XX, as guess, But look it like spending over of in of I over $X $XXX an years, want too would ahead of I think easy growth these to about of So seem back we don't

Matt Meloy

yes. Yes,

I'd what out our into say feel think position we 'XX really good going of about I is coming 'XX.

is up going very well. to set 'XX think I

last year. think $X.X this I beyond and about We $X.X EBITDA 'XX. see in frankly, billion significant We of 'XX, billion guided we to year. were $X.X billion CapEx growth

of can EBITDA results that our average. to in we year in not It's Xx average kind a on we -- X set multiyear a X that in is EBITDA So it you X.Xx It's amount multiple spend multiyear think CapEx. a call the investment do, year. so it,

but XXXX. years, what I for couple decided for very it guidance sets not of strong when a think up trajectory we 'XX, you just that We give of seeing EBITDA kind at very just spent is spending point just the to in last our to look So kind overall you going the set we're of just volume 'XX. footprint our historical nice and to for us across up

Operator

comes Brian Reynolds Our the next from question with UBS. of line

Brian Reynolds

Maybe long-term think outlined growth of EBITDA to around follow I of outlook, on you up build kind some the a kind of multiple X.Xx.

a think came in X X of or lower the I quarter past that years kind of at projects ago, you multiples. some these in outlined much

understand if So maybe kind has we the build anything that multiple. commodity doses trying see can of the with to just you upside the difference could and whether to conservatism of there the to or -- maybe EBITDA there's in some whether play build some maybe

Matt Meloy

years, I question. back mean, that. is good do said kind to we been of go historically, able X targeted. we to build than We've No, multiple really, better what kind Xx of Sure. you

I think that cushion was X kind that some in just of to X.

Permian, volume multiple. closer good even look filled higher. If our Prix across returns Xx a up had expectations, build quicker the than been at And you of X even the back we've our which just drove really kind really the to We've years, Grand growth system. last much

there's I'd we that floors talked we a perhaps price we other. or really I not commodity price what about, say we've and invested in investing delta one it's from commodity a a really tailwinds. lower past which had and there's in drive Jen go multiple. -- fundamentally that have more if But large forward we've this have given year, So I'd into did the get upside year different put the that not next commodity we some strong could prices there's fee we're where conservatism in way nothing number. say think some I'd lower what investment performance. But say bit the of little in, than

Jennifer Kneale

I in assets, part further and right would how that because Brian, makes online, highly just think when will they very is our plan. think, the of utilized the on we be as utilized course, you've playbook the cash our it come room now is conservatism a that progress of footprint. highly a that which very means in person projects is which has But add time I really years. that, conservatism same like in bit It the well are we number they I benefited across great really incremental many highlighted we're X.Xx multiples for that that by little from try the our It operations feels significant the just been of teams, last reflective over and quickly. provide it in that's at our think tougher realized they're that the for engineering to versus start-up seen the flow as finance

Brian Reynolds

of and at point. Spiro's Great. kind Previously, has as And kind then kind on updated a And to the manage that XX%. kind follow-up And system as any more number expectation question clip And Midland guide, Maybe digits. to a single a this then acquisitions and a follow-up, to the the maybe high are firm of growth. of quality just issues, that? just base some any Permian gas past around thought talk you gave of then grow just of how of illustrative process talk the as you that's about impacting potentially does your relates on the higher on the M&A we able -- operational the your And at hiccups, in your it rest there? HXS basin? sour gas of than view

Matt Meloy

probably on can start little Okay. and bit too. touch then of a I'll Pat this,

it just was 'XX. sets our I us where December and year. growth growth month, going Permian highest good XXXX think feel really up starting you really look really good about for just we're the exited into the when for we our production year, at we where

here, not little to about for high we've well, better, from digits I'll let modest it our that. from And really little only that's 'XX a year-over-year. relatively get growth think see then Pat bit why very even even strong X%. But the customers. us So going single speak if beat consensus bit We've a around we're up to with landscape 'but XX. And anywhere or typically we E&P a is I said of sets kind M&A

Patrick McDonie

of M&A activity to X over lot a Yes. There's last years. been X the

unfamiliar announcements with across out, relative a pretty these meaningful ones So material in something as the companies we frankly, Frankly, positions with the difference new growth it's we're our And combined consistent not all the parties. The are see don't we've new have seen we've seen to we companies. individual with. that the coming with past. position

contracts the have all parties. We with long-term

have relationships great with all producers. We those

at going you expectation least of to going the announced major you their the look -- are of at significant a assets what's those be. side growth on to there's the parties, there's on by growth what allow that wouldn't incremental If to one Frankly, -- our you been mergers, expect could expected Midland of impact be publicly the basin. bigger on an levels

activity, we've So relationships. there from reliable. going is good but We've we're contracts, a got a it because good lot we've assets, and of got we've benefited great on, got lot

Matt Meloy

of handle just this of part spent spending [ Yes. And was year year around trading. that to HXS, to additional handle drilling to that. your treating last we additional wells and both to Delaware the treaters handle to gas and for pipelines we the other add gas and and putting that, capital, some -- and lot in as the we're Basin. question quality facilities We're A ] too, primarily and lot in multiple injection are COX of wells a and connectivity

most deal becomes really have think to I continues Delaware producer we'll that a So nicely that to issue with, are grow and as another year. the -- it in to be to gas the end positions the in going quality us large will the be lion's the that. of that capital will or of share of position And by good be this of kind in really handle

Jennifer Kneale

whether really rebounded question I think of as I'm around volumes had the of And of of get the we're really impact back to question result And then proud was proud think in I all your -- winter operations very the storm. volumes a online. efforts teams last our

close to seeing were to that experienced back the we we're we So weather. extreme levels before

Operator

comes of question the Richardson with next from Scotiabank. line Tristan Our

Tristan Richardson

you outlook. from assumption. appreciate out but in timing this curious the really sensitivity talk you have flexibility about event that really that deviate voice laid 'XX can embedded that my producers you Pardon the guys spend high and single-digit that CapEx in about Certainly, end talked sort about timing Greenwood But morning, the in that that maybe that II 'XX support inlet 'XX? just and the coming Train for half does in the is single-digit that of illustrative? 'XX? towards adequate Bolus capacity on also high second XX of Is assumption, towards whether your And to plan then deferring of about the you

Matt Meloy

Yes.

the ordering So in long as we're lead 'XX. be there's and about And also we spending both Train it, going 'XX our have X 'XX, in 'XX plants, XX, some additional think then of long into for then the in have mentioned which to and will we in call X time, some 'XX going start base to 'XX capital on maybe kind going X Midland, time of lead and to and ordering spending assumption this Delaware, additional we're plants, need budget. that

on ranges, sensitivities coming perspective. big will perhaps more could transportation that lumpier. we Permian, and give the an So right from the it's to could Are to a Those that's NGL when that out our kind bit. Really, push CapEx what little really What have you Yes, lower -- little the downstream a move push tends going could we we timing those next side. bit. a be does when If is the more a in end growth that little can even of the projects of then now. Sure, there's budget us should up need about fractionator? -- growth we export? in the larger need that It on more on, bit could it to if the runway out? be -- it But are bit? some our Daytona's production up plant move good

timing just business a could the of of some around really and our related down that think and capital. I be G&P up plant lot 'XX, and So field

Tristan Richardson

Appreciate did big helpful. now. Super change I a in then or Clearly, you substantial multiyear guys kind quick -- just of a of of really a this of your it, been a think 'XX? mix? occur see mean, [ from Or And throughout some for XX% fee-based 'XX you which function substantial move growing? where And inches Are follow-up. producers about are seeing recuts 'XX. Matt. recontracting is Talking priority game the a you has and I a ].

Matt Meloy

in a just we the getting progress over components, in primarily really making of Yes. just last fee-based that get redone. but there would number fee business, was a more say And fee-based years. step-change G&P XXXX. job steady floors fantastic our did We've contracts been on I also to several commercial able team the were

So downside done. overall no, it changed was is a step-change profile late in our 'XX, and which risk significantly

we're now XX%. estimating So

sensitivity. We You have see that length. still our on some price commodity

down. much different that's of $XX where to moved we $XX XX, XX downside, downside million, XX is and were some months But relative overall is million, prices our That sensitivity. size than there certainly XX% if really not So fundamentally ago.

Operator

question comes of next line the Our with Barclays. Theresa from Chen

Theresa Chen

segment. within following up to question the floors related a have G&P on question I your Tristan's fee

for Just of contracts with POP point, changing, with over fee that you floors put as time. floor why legacy you understand the putting thinking would the fee-based you customers is at behind to have some in your your allow as renegotiate? rationale versus XX% contract trying floors in And to POP? Or within over within POP time, floors you floors the in the fee-based POP the previous the fee mix really exchanged additional about just fee i.e. contracts have XX% put incremental this fee-based for really is

Jennifer Kneale

actually of This about but what for reasons. a is It's Jen. different talked mixture you

underpinning our When Lucid contracts. Lucid, primarily the a seen fee-based were You've acquisition. of largely largely fee-based result that increase percent the we acquired that G&P is we as contracts bought business of

building and us years, effort commodity XXXX. is have has to of of to been been commercial rate that all many to -- Targa Targa an continue to capital, back make also momentum we the that incentivize to because last goes order they increase my last for our many This price math. very so really I environment. invest order be of consistently sure this those would just a that been in to downside G&P to the on going generated have simply you've willing gone what very an the from meaningful them fees be and business need seen with worked over for building I saw demonstrate capital adequate big company, spend effort it's on willing to that producers to just team think is huge hats -- many, what we a back our will really implications to construct. with has and that producers in do the a conversations, like acquisition. But And successful at doing, we in we off associated been return to our take to that It's over years. But step-change in And get in supportive have of our

to existing extent been into contracts, gone up have us floors again, the to in those able place restructure not we've incentivized we've as while prices to commodity even giving spend capital the So and put rise. fee that, prices to upside POP are the to commodity continue lower

very teams supporting works the a place they've new really have us done producers floor acquired place our And really And on commercial restructured just a a been assets fee-based been under by good our structure capital. commercial we've that in put and so or returns G&P need generating of been to in mix as but in of it's side, across either existing while also we've continue integrated then contracts we've lot gone with job a what with also for producers fee the and have our contracts put that to construct team, our system.

Theresa Chen

That's from think going on and to the multiyear the back projects the in thinking a $X.X about $X.X when CapEx, helpful. long-term then illustrative billion we through basis billion the so next lumpy segment. downstream And

fractionation that the segment had eventual have you additional the online Daytona at and Grand juncture In addition of can this growth export about talk you by capacity, filling to looping how cadence coming of of XX-inch and to Prix, spend thereafter, do you we with year-end that the loop? years to would get or from what XX-inch $X.X up the for billion and in billion $X.X build And be come? and beyond the

Matt Meloy

Yes. Sure. question. Good

primary downstream having to really primarily delta delta would But I downstream. say $X.X the $X.X So that's billion $X.X $X.X facilities year. multiple billion fractionation and the spending, this is really and the billion billion more from between is

on don't we have projects larger that transportation, is the any spending next meaningful of NGL year pipe. One another

year. on good to some We this us have That's going Daytona coming provide runway.

So depends and provides move rate runway in then our barrels to growth the Daytona. overall the how of NGL really on on what to much those Permian capture that

longer take a even These that. So billed, about. of than that pipes is years. get couple something we're thinking bit probably little to a

from X, to competitors. to need do XX-inch and look X had about available think some we transport segment. There's there of we So our looping out also when that years out say,

we'll our think that be pipe. can So we I move can move our transportation some as well. volumes of own share competitors our -- lion's had of There agreements be can with the on

on road capacity So it's really, building the some all pipes. whether from some the utilizing us, are us XX-inch for table, options a or excess down NGL other

D. Pryor

put West Matt, barrel operate out above nameplate have I kind can that shown And a we've fact just we leg, the we actually Yes. of that the would XXX,XXX that our that add there. day

So of are time. the leverage provides of through pipeline. us north a the operating a pipeline. the still lot that volume got along of the going all periods with are We've Daytona from West for And leg, feeding forward XX-inch leverage in along with operating XX-inch volumes coming that lot certainly,

Operator

Our next of Mitra of question Bank line with the comes Neel from America.

Indraneel Mitra

Thanks on the all on the up question detail for CapEx last the spend. wanted to and related the downstream. I million to $XXX follow mostly

million frac spending about on exports. about leaves you're and year average, of each Assuming transportation half that a for, year, $XXX each

you're oversupply, pipe So for just you ability And others see then your second, for Galena time? the all, is first of pricing able to need at constraints? when Are build elongated pipe are with expanding barrels? there to do hold your any because Park there power NGL expand meaningfully this competing land

D. Pryor

growth we are the the there we capacity the Daytona out capacity fill existing about not pipeline, and our we we side Daytona. about third-party today. Belvieu on relative think have Neel, think on and utilize our when to our expected G&P would And we this for that that facility off into Scott. -- recognize that are let's is the when first I'll we fighting start that today, volumes up for just it pipes fees say and have coming that pipe,

today, that hand-in-hand relative on if the the with industry G&P fact to that of that a the because and Pat pipes, can transportation. Matt to of have look might to whenever we do capacity alluded loop bridge folds always team utilize to opportunities we our to that need we existing we for -- again, is all system. kind his So on that there to side growth around utilize us

idea of really good relates like. potential and adding next it As a looks from things to And have factors variety adding a of of docks we Galena adding expansion what to it's nature. that Park, to project the refrigeration pipe,

to needs obviously, be keeping, that business, G&P growth, our and what we'll driven by to timing to on evaluate our a continue we're again, close that. eye relative So

So nighttime in we I hand-in-hand will both own say, again, from their to the spend the expansion really had on fourth projects a transits, quarter without having today, lot we're expansion that of those are benefiting of the capital. that

as capacity ways So debottleneck well. for look to get we'll to continue incremental possible to if

assets we to some runway we've we existing So have Galena Park. think got that of have. and I But the a lot opportunity available expand at with space do

Indraneel Mitra

just I quickly. if could up And follow Perfect.

that out would know perhaps all come Permian with between the could growth what Delaware break basin. you for activity producer you're the that I versus of X mentioned of basins you overall outlook peers out in your aren't the Permian? almost in Midland. the the necessarily their seeing oil of representative just the of One But the

Matt Meloy

mean the growth the in see we significant Yes. in but growth see Midland Delaware, we I well. as

producers So both. really both footprints, growth active across we see of our in

in So the growth on our we we see see in footprint, Midland growth and Delaware. the

Operator

with Our line the next question Stanley Keith of Research. comes from Wolfe

Keith Stanley

pick third-party to to you on to Or there that do simply thinking into tie volumes volumes when -- the Is service? XXXX. follow-up Targa comes material volumes? One Daytona expecting you're on pipeline are Daytona G&P to up year, next just expect

D. Pryor

as feeding Daytona. into Keith, I we'll by what predominantly would this G&P to footprint it's be is Scott. say our driven

the going combination, a the of is plants be we've and that any it So of G&P our would I announced is going forward. and that additive proportionate plants but to say to share the already potential largest related

Keith Stanley

clarify it. Jen, then, taxes. Got to wanted on And cash the

that cash full in XX% statutory said I XX% think and you house outlook? then AMT brings pass back expectation, then depreciation which rate relatedly, tax XXXX. And bonus tax that So how impact potentially rate would legislation, in 'XX

Jennifer Kneale

pretty close. It's are pretty be subject XXXX. borderline the actually XXXX AMT or now, would we to right whether We in

moving fully that that trying is a And bill accelerated have we're call gets the our would losses early would subject Ultimately, our and way we to that it, the to look be we'd gets the then a based operating latest policy rate. To do our that through its scenario, in passed, be may you we subject depreciation, to that through see And to bonus give passed, help delay -- right forecast us. have conservative right of on and return be be so we'll but AMT. in current may now. final would that our read XXXX, net forecast. year existing that things, -- big the what extent now So -- the see on worked to statutory way that a tax a based or

Operator

Mackay of from Our the next line Goldman comes question John Sachs. with

John Mackay

it? way on strategy Scott. appreciate But percentage directional Do and increase the hold NGLs footprint be color. percentage kind are basis able of for you would when a guys of to standpoint, Just you you guess I to want one potential the expansions. looking comfortable if Maybe the top-down Are wanted on percentage do I I be forward? processing the any export that to back thought go with that you of coming quantity want to we export that going off strategy this interesting. side, much is about think Permian to to high-level, moves its how dropping? a from your

Matt Meloy

Yes. Sure. Yes.

footprint. we As to have G&P G&P want coming we from our way all from through volumes we think the handle the really to sure about dock, make capacity the our

good make how think We goes sure propane to export so fractionation. have staging And And and transportation, of kind that for we about market a for that's butanes. want as well. we

export. that's mentioned, what we Scott As really

us some capacity go see that another came at much up some cushion and So we're going forward. to cushion opens are gives expansion project. But gives call And looking of, that on X% as we nighttime good kind us need XX%, it, how just to really export scoping. we I of before with that the that the us, nighttime for we think as allowance already

timing I'd greenfields pipeline, not the say, kind need we those more so really those need kind dock. as view projects looking determined, we of do the And be But but or debottlenecking. are of are to brownfield. I is refrigeration, do we a large-scale, at

point, then you you pinch next you You excess a the the spend do and some get of and do then couple you million next. hundred have dollars one capacity,

our looking to the sure are longer the we're those system. yes, make So the things we term. But handle want volumes can across kind over coming of at we

John Mackay

That's one quick one. just clear. Maybe last

caught mentioned on been up compression compression across side. you'd board. the Obviously, we've market in the You hearing about the tightness

a Permian. versus of on actually bit whether a constraint One third of and your being Maybe relative forward this as thoughts it's quarter. high-level in this peers a better talked gotten just at growth potential guardian that here about even point going the is your from or

Matt Meloy

on up. volumes last that getting really last you mean I year done said late move really lot compression the and then our the behind last we all about we and of QX just our -- year. compression on have a saw talked year, We being kind was come getting had in issues of Yes.

talked We another compression. of have about million $XXX

about year now right out for that ordered we So a compressors.

were and and get getting XXXX. of order tried to behind inventory year. We we just last stay it some to we approved ahead try day So the saw more of other AFE get for to as another ahead it we

lot look So end depend But that part it it. stay smart, you does ahead our if trying exceeds at a forecast, of you When to can growth. we're and be on of some points. forecast having see volumes, pinch the volume up of

Patrick McDonie

come I have times are The thing I'd still Matt, is And not times down. Yes. think the lead lead add, only long.

gotten exists. out front So We've it. in just that problem still of

John Mackay

that If follow-up to from engine X that should whether year Any I down guess, announced expansion on Caterpillar initial bring I line, a their read better? a or little could just ago. something on ask capacity that. on one a large week a

Matt Meloy

in not heard times. any change lead have I

Operator

the from comes Blum of Fargo. Wells with question next Our line Michael

Michael Blum

assuming Just any wanted I'm that run to ask project. if And billion contemplate not $X.X on the rate gas the pipeline? update does Apex Permian

Robert Muraro

This is Bobby.

want to and and fact options the before I our go again: our go parameters to we're the the Apex. and along our can Prix includes hard plants that and out of so We flow say gas on -- basin that else. down the their about we'll said with Grand continue Apex which all continues think work across to docks. Last we out to that it several of that everything call, get heads, out it priority is those NGLs I gas come working would talked back that and on basin, raised other have fit the We've of projects #X

get that confident So that I'm built make encouraged Apex basin. the -- something every of egress at the and increase gets an I am that passes, multiple or of we're I by get month this will pipe doing year, looking online more options that we're And to the sure a comes to whether done 'XX-ish. out work that's one

So...

Matt Meloy

project make the that is No. Yes. us that not a partner. $X.X be CapEx goes, then, any for part, does the In we'll And on billion. included Michael, to it in evaluate sense

pipes for that would partner the project majority financed these that be will in There's of increase some a of the capital. for that So also it CapEx.

is small, amount relatively it may may the any outlook. be of equity we not be so it in would our or So financed. project not to in put included that into were But --

Jennifer Kneale

been good just capital call redundancy we ensure I that in between last the point have just residue on billion, the our what really on years I'd residue of some got plants. one spending we've side And add intra-basin $X.X to last couple Permian in the

that in multiyear So billion projects. to the $X.X included extent that in we're outlook, the that no future, major contemplating of but will any be that

Michael Blum

that Okay. on Got to in a would then starting on of this that what's be bit No, XX frac that year, helps. you're spend it. And service? when the I timing little just guess

D. Pryor

not gives chain creating this needs future. flexibility be timing just or on chain the equipment. that Michael, issues Scott. into be with issues Ordering date. supply are planning is items out what long the supply -- that to lead in-service finding that some would for defined Yes. We're what certain us some We've

in capital take And we result put as that can the dollars date out future. so small ensure a can hold of to we some we whatever there that,

defined point, but want to of. our something don't keep ahead on we So and a certainly it's radar that have date at we this keep

Operator

I'd Sanjay the Lad session. now This closing concludes to the like call question-and-answer remarks. back to for hand over

Sanjay Lad

this morning, Thanks and Thanks call and your have. to Resources. Targa available questions day. that everyone you a may for in The appreciate be IR great was any on we team have interest the will follow-up

Operator

This for concludes Thank participation. you today's call. conference your

disconnect now may You

Targa Resources (TRGP) 15 Feb 242023 Q4 Earnings call transcript